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Justice and Freedom for 
 Industry 
 
 By 
 
 William Howard Taft 
 
Digitized by the Internet Archive 
 in 2016 
 
 https://archive.org/details/justicefreedomfo01taft 
 
Justice and Freedom for Industry 
 
 By WILLIAM HOWARD TAFT 
 
 I T is easy to fix one’s attention on what seems to be an abuse 
 and to attack it with such an emphasis as to make it stand out 
 in a bold and bald and naked form, without the proper shading 
 and without a statement of mitigating circumstances. What one 
 says may be true in letter and yet because of the failure to note 
 the other side may be unjust and false in spirit and effect. On 
 any issue which affects the vital interests of classes in a com- 
 munity, we must expect such partisan statements, and we must 
 realize the difficulty of getting at a truthful and judicial sum- 
 ming up of the controversy and a just conclusion. Not only is 
 the problem of reaching the truth a difficult one in itself, but it 
 is also attended by embarrassment that in such a heated con- 
 troversy the one who seeks the median line and to hold the 
 balance even, is generally condemned by both sides for his pains. 
 
 Competition Essential to Progress 
 
 This general observation as to all controversies finds a most 
 noteworthy illustration in the continuing issue between capital 
 and labor. Our present society with the institutions of personal 
 freedom, civil liberty, and private property finds its moving and 
 basic spirit in competition. Without this we would make no 
 progress. Without this the prudential virtues, industry, effort, 
 self-restraint would all abate and retrogression would take the 
 place of progress. Between those who control capital there 
 must be competition in some form, or its use will cease to be 
 directed in the spirit of wisdom, energy and progressive in- 
 genuity. The spirit of competition in the reduction of the cost 
 of production has led to great combinations of the small con- 
 tributions of capital from the many who have saved, in a reser- 
 voir to be controlled by the comparatively few leaders. This 
 principle of combination has given great power to the leaders 
 and at times they have been intoxicated with the lust for greater 
 power and an absolute control of capital in different lines of in- 
 dustry and the elimination of competition. This is an excessive 
 use of their power and needs curbing, and the Anti-Trust Law 
 was enacted to prevent this abuse. There can be an excessive 
 spirit of competition and that rule or ruin policy which is both 
 
 3 
 
suicidal for those who initiate it and destructive for those against 
 whom it is directed. It can only be modified by the common 
 sense that prompts self-preservation and the principle of live 
 and let live. Then there is a competition between individuals 
 of the labor class. This persists no matter how iron the rules 
 of the labor unions. The terms of employment are ultimately 
 fixed by the law of supply and demand and by the competition 
 between laborers. Organized labor does not generally include 
 all of those engaged in labor even in skilled trades. Then in the 
 fixing of the union wages and within the union itself, the spirit 
 of competition between members has a necessary influence. 
 
 Then there is competition • betw^een the classes. It is a 
 normal condition that there should be an ever-recurring issue 
 between those who pay wages and those who earn them as to 
 what should be the just share of labor in the joint product of 
 labor and capital. This controversy must be kept within the 
 limits of moderation, to be fixed by rules of law and by the good 
 sense of both sides, prompted by the consciousness that both 
 capitalists and wage earners are in the same boat with the whole 
 community and that continued injustice to one class is certain 
 to injure the whole of society. This controversy must recur 
 even when the beneficial co-operative system of dividend sharing 
 prevails. 
 
 This issue affects so closely the interests of those engaged 
 in it, we must expect an exhibition of intense partisanship, and 
 we must expect also a pressing upon the limits of law and com- 
 m.on sense in the effort of each side to secure what it deems its 
 right. 
 
 Purposes of the Clayton and Trade Commission Acts 
 
 A consideration of the Clayton Act and of the Trade Com- 
 mission Act, which are really to be taken together, and a dis- 
 cussion of their legal effect and of their wisdom and expediency, 
 necessarily involve the issues growing out of this competition 
 between capitalists and its effect upon the public weal, of the 
 competition between laborers and its effect upon the freedom 
 and effectiveness of labor and the better condition of the indi- 
 vidual laborer, and of the struggle between capital and labor in 
 the effort to settle the share of their joint product. What I 
 would like to do tonight is to give as nearly a judicial expression 
 upon these issues as one can who is neither a capitalist nor a 
 wage earner, and who thinks he has at heart the welfare of 
 society. As I have already indicated, an attempt to do this will 
 arouse criticism by those engaged in the management of capital, 
 that a man who has not been in business has no practical knowl- 
 edge making valuable his views of laws concerning business. 
 The criticism by the leaders of wage earners will be that it 
 is the expression of one affected by class consciousness, though 
 
 4 
 
just exactly what class it is of which one is conscious may be 
 doubtful. We usually find in such heated denunciation that 
 class consciousness is intended to describe an absence of the par- 
 tisan spirit which the denouncer has. While the attitude of 
 hostility of both sides toward a judicial expression may weaken 
 its influence, at the same time, it may be significant of its justice. 
 
 The first thing to be noticed with respect to the Clayton Act 
 and the Trade Commission Act is that it reaffirms the Anti-Trust 
 Act. Section 7 of that Act in denouncing certain Acts intended 
 to lessen competition contains the proviso that: 
 
 “Nothing in this section shall be held or construed to author- 
 ize or make lawful anything heretofore prohibited or made illegal 
 by the Anti-Trust Laws, nor to exempt any person from the penal 
 provisions thereof or the civil remedies therein provided.” 
 
 And Section 11 of the Trade Commission Act is: 
 
 “Nothing contained in this Act shall be construed to pre- 
 vent or interfere with the enforcement of the provisions of the 
 Anti-Trust Acts or the Acts to regulate commerce, nor shall any- 
 thing contained in the Act be construed to alter, modify or repeal 
 the said Anti-Trust Acts or the Acts to regulate commerce or any 
 part or parts thereof.” 
 
 Now there is a studied effort, by gentlemen who are de- 
 fendants in pending suits under the Anti-Trust Act, to discredit 
 the beneficial effect of that Act, to hold it up to criticism, to make 
 it responsible for depression in business, and to attack it as an 
 archaic effort to prevent material progress. The arguments 
 that these gentlemen advance, and the plea for co-operation in- 
 stead of competition, are nothing but a euphemistic defense of 
 bringing our whole industrial system again under the monopo- 
 listic control of a few managers, with the inevitable result that 
 we must regulate this monopoly by national direction, involving 
 price-fixing and as complete control of all business as we now 
 have over interstate railroads. To this I am utterly opposed. 
 While I concede that the public nature of the function which the 
 railroads of the country perform involves in some degree a neces- 
 sary monopoly under public franchise, and therefore requires 
 regulation, we must all concede that the duty assumed by the 
 Government and discharged by the Interstate Commerce Com- 
 mission is one that is imperfectly performed, and frequently re- 
 sults in injustice, and an injurious constraint. If now we were 
 to extend such Governmental control to all the lines of business 
 industry which are not dependent upon public franchise and at- 
 tempt to regulate in minute detail that business, and fix prices, 
 our machinery would break down, because of the immense field 
 to be covered and the inherent difficulty of substituting the arbi- 
 trary judgment of men for the inexorable operation of economic 
 law. The anti-trust law, as it is enforced today, is 
 the result of a construction of 20 years by a wise, patriotic 
 and impartial tribunal, the greatest in the world, a tribunal which 
 
 a 
 
has had the benefit of the experience of 20 years in the life of 
 the law, and which gives, in its construction of the law, proper 
 weight to the effect of dominant and well settled public opinion 
 demanding its enactment and stimulating its enforcement. An 
 agitation to secure its repeal and a return to the conditions of 
 industry under monopolistic control before it was made effective 
 by the construction of the courts, is utterly futile and will meet 
 no success with any Congress that represents the people in its 
 action ; and certainly not at the instance of those whose conduct 
 of their business has invoked Governmental action because of 
 their alleged violation of the law’s restrictions. It is not too 
 much to say, therefore, that the Clayton Act and the Trade Com- 
 mission Act, in so far as they confirm the Anti-Trust Act, are only 
 expressing the opinion of all but comparatively few. 
 
 Legislative Hostility to Business Success 
 
 My objections to the Clayton Act and the Trade Commis- 
 sion Act are that their enactment with such a blare of trumpets 
 and avowals of hostility to capital in general, with little discrimi- 
 nation, had a strong tendency to frighten those whose judgment 
 determines the amount of new investments of capital, and thus to 
 restrict the normal expansion in our business due to the reinvest- 
 ment of earnings. It is a mistake to suppose that capital is all 
 owned by rich men. It is made up chie% of the savings that 
 flow into the great reservoirs of savings banks, life insurance 
 companies, trust companies, into the stock of railroad enter- 
 prises and industrial corporations ; and the very large percent- 
 age of the total capital invested is owned by wage earners, earn- 
 ers of salaries, and men of small or moderate means, who use 
 these agencies to secure profit for their savings and a reward 
 for their prudence and self-restraint. It is true, however, that 
 in giving effect to the principle of combination the control of 
 these reservoirs of capital and the reinvestment of its profits on 
 invested capital, are more or less subject to the judgment of the 
 comparatively few to whose custody and management the reser- 
 voirs are entrusted. The aftermath of a crusade and great re- 
 form in our political and business condition and a rescue of the 
 country from the dangers of plutocracy is excessive hostility in 
 legislative expression to success in business and to those 
 who control capital. The hostility has been manifested in 
 all sorts of restrictions, unwise and useless, and the enact- 
 ment of further restraints in the Clayton Act and in the Trade 
 Commission Act were much more detrimental to the business in- 
 terests of the country in frightening investment than in any real 
 effect after they shall have passed the scrutiny of the courts 
 and their essence has been disclosed in the test of actual liti- 
 gation. There was in their enactment a political motive that 
 prompted the claim on the part of those who voted for them 
 
 6 
 
that they were much more radical than they are. A close exami- 
 nation of the Clayton Act shows that while it divides up the 
 offenses denounced by the Anti-Trust Act, into a variety of details, 
 it really adds but little in its practical restriction of methods of 
 conducting business and the freedom of combination and the 
 freedom of competition. It adds a useful provision to the law 
 in denouncing as a Federal crime the looting of interstate rail- 
 roads by reckless promoting directors charged with the duty of 
 honest, careful management in the interests of their stockholders 
 and the public, offenses which had theretofore been denounced 
 only by State laws. The bringing of this offense within Federal 
 jurisdiction, because of the greater certainty of enforcement in the 
 Federal courts, will make less likely such mismanagement as 
 that Which has been disclosed to the country in a number of our 
 great railway corporations. 
 
 Trade Commission Act Attempts the Impossible 
 
 In the Trade Commission Act a Federal executive tribunal 
 has been created whose duty it is to keep under detailed obser- 
 vation the entire industrial and commercial business of the coun- 
 try, other than that of interstate railroads, and wherever it 
 detects unfair methods of competition, to summon the perpetra- 
 tors before it on charges, to give a hearing to make a finding of 
 facts and conclusions of law, and to issue an order to correct 
 such methods, and then, if their conclusions are disputed and 
 their order is disobeyed, to submit the record to the courts for a 
 consideration of the legality of the order. There are two 
 thoughts that occur to one in respect to this provision of this 
 new legislation. One is that the field committed to the jurisdic- 
 tion of this Federal Executive tribunal is so wide, indeed so 
 much wider than that of the Interstate Commerce Commission, 
 which is already weighted down with its duties, that the Act 
 essays to do something that is utterly impossible of performance. 
 This will be seen more clearly to be true when we consider that 
 everything that it has to do must be subjected to the courts be- 
 fore it has in any degree effective sanction and enforcement. 
 We all remember how the interstate commerce jurisdiction 
 utterly failed when it was obliged to submit its orders and its 
 judgments to a court and ask judicial enforcement involving 
 further controversy and delay of several years. 
 
 Second, the Commission is given power to determine whether 
 in interstate business covering this wide field, particular methods 
 of competition are unfair. If this is intended to authorize the 
 Commission to formulate new restrictions upon business, which in 
 its judgment ought to be restrained, it is certainly a delegation of 
 legislative authority which Congress has no Constitutional power 
 to delegate to it. It is reasonable to suppose that when the court 
 comes to determine what an unfair method of competition is, 
 
 7 
 
it will look to the rules of law and to the statutes of the United 
 States for guidance, and it will keep the Trade Commission with- 
 in the path thus limited. In other words, what the Trade Com- 
 mission will have to do is to confine itself in determining the ex- 
 istence of unfair methods of competition to those which violate 
 our present law; that is, to the restrictions of the Anti-Trust Act. 
 It becomes, therefore, nothing but a tribunal of investigation for 
 reporting facts and the application of the law which can only be 
 made by the confirmation of the court. In other words, it is 
 nothing but a glorified bureau of corporations with larger sal- 
 aries and greater powers of investigation. It is fortunate that 
 the power thus conveyed is not really larger, because the stand- 
 ing and national reputation of the men who have been appointed 
 to fill these large salaried positions as members of the Board are 
 not such as to give great public confidence in their experience 
 or judgment. Not one of them can be said to have had 
 national standing as a business man, or as a lawyer; and 
 while the standard suggested for this Commission when its 
 creation was recommended was that of judges of our National 
 Supreme Court, I regret to say that it has not been met in the 
 actual selection of the Board. While, therefore, the powers of 
 the Board will not in my judgment under the construction of the 
 courts prove to be as formidable as they were heralded to be 
 by those who passed the Act and those who proclaimed a new 
 freedom in business, the thundering in the index, together with 
 the passage of the Act, has had the result of making capital more 
 timid, of restraining investment, of decreasing the wage fund, 
 and of throwing upon those least able to bear it the burden of 
 business depression. The Act, moreover, does furnish to these 
 Trade Commissioners inquisitorial powers of very doubtful wis- 
 dom and utility. 
 
 The fourth amendment. to the Federal Constitution, passed 
 at the instance of Thomas Jefferson, contains the provision 
 that — 
 
 “The right of the people to be secure in their persons, 
 houses, papers and effects against unreasonable searches and 
 seizures shall not be violated.” 
 
 That amendment recognizesi a principle of government 
 that had approved itself to the British people and was con- 
 firmed by the American people in the framing of their Consti- 
 tution. Now while it is quite possible that the provisions of 
 the Trade Commission Act ma)’- not be of such a character as 
 to violate this constitutional guaranty, they do have a ten- 
 dency to bring about the evil against which this amendment 
 was directed. We have heard a great deal about pitiless pub- 
 licity, and we have noted the eagerness with which legislators 
 rush into investigations for political purposes and at public 
 expense. The history of the investigations by the Democratic 
 House of the last Administration, if anyone had the time to 
 
summarize it, would show a waste of public money, a waste 
 of Governmental efficiency and a series of personal injustices 
 done through the instrumentality of partisan investigation 
 that would bring to the minds of judicious men the importance 
 of not going to extremes in the inquisitorial methods for the 
 investigation of private business to which this Trade Com- 
 mission Act tends. Fear of the excessive and unjust use of this 
 innovation in the law is a legislative cause for alarm to the busi- 
 ness interests of the country. On the whole, however, my own 
 judgment is that the Clayton Act and the Trade Commission Act 
 add very little to the effectiveness of the Anti-Trust Act. 
 
 One of the greatest objections to them is the construc- 
 tion and effect of the anti-trust law have been settled by 
 twenty years of litigation and consideration by the Supreme 
 Court, and they will now require another decade of litigation 
 to show that they have not added to the scope or material 
 effect of that Act. 
 
 Clayton Act was Passed for Political Reasons 
 
 The Clayton Act deals also with the controversy between 
 capital and labor. Into that, controversy, by reason of its 
 history, the power of the Federal Courts to issue injunctions, 
 to protect business and property against unlawful invasion 
 necessarily thrusts itself. The Clayton Act has done a good 
 thing in formulating the proper procedure in the issuing of 
 preliminary injunctions without notice in all cases where such 
 extraordinary remedy is needed. Its provisions with respect 
 to the violations of the Anti-Trust Act by labor organizations 
 and agricultural associations have been proclaimed as a great 
 charter for the freedom of labor in its controversy with capi- 
 tal. It was passed for political purposes, to satisfy the de- 
 mands of the leaders of the American Federation of Labor, 
 with the hope of securing the vote of the labor organizations 
 at subsequent elections. The vote of every member of Con- 
 gress and of the Senate was noted, and those who were ad- 
 verse were marked down as unfair to labor and were threat- 
 ened with punishment by members of the labor unions at the 
 polls. I do not object to this holding members of Congress 
 and of Senators to a responsibility for their votes. It is the 
 right of every American citizen to demand of his representa- 
 tive that he shall conform to his views of national policy or 
 else lose his support whenever he seeks a renewal of his man- 
 date of representation. What I do object to is the cowardice 
 of representatives who yield their own ■ convictions as to how 
 they ought to vote on such measures in fear of the organized 
 power of the unions in their respective districts and States. 
 What I also object to is the hypocrisy and unfairness in denounc- 
 ing the legitimate use of arguments by other classes in the com- 
 munity to induce members of Congress and Senators to favor or 
 
 9 
 
oppose legislation in which such classes are interested by proper 
 organization and proper arguments as “vicious lobbies” to be con- 
 demned without stint. Nothing is so unfair and unwise as to en- 
 act legislation that seriously affects the property and business in- 
 terests of a class without giving to that class the fullest op- 
 portunity to be heard, whether their cause is a just one or 
 not, and whether their interests are opposed to the public weal 
 or not. It is begging the question and assuming a conclusion 
 before hearing to denounce every activity in bringing their 
 interests to the attention of Congress, by attacking them with 
 an epithet and denying them a hearing by a muckraking de- 
 nunciation of their motive. 
 
 Violations of Anti- Trust Act Still Punishable 
 
 I have not time to state in detail the effect of the Clayton 
 Act upon the remedies which may be resorted to in contro- 
 versies between capital and labor, to constrain the methods 
 used by either side in the controversy within lawful limits. 
 I can only state shortly that in my judgment, after a close 
 examination of the Act, especially of Section 6, and the limita- 
 tions upon the cases in which injunctions can issue in labor 
 disputes, that a labor organization or an agricultural associa- 
 tion which violates the Anti-Trust Act by injury to business or 
 property of the employer, by violence or crime, or by the use 
 of what is called the compound boycott (that is, by bringing 
 into the controversy material-m.en and customers through 
 threat of boycott against them unless they cease association 
 with the employer), are still subject to civil action, equitable 
 restraint or criminal prosecution under the Anti-Trust Act. The 
 case of Loewe against Lawler, known as the Danbury Hat- 
 ters’ case, in my judgment would have had exactly the same 
 result under the existing legislation as it had under the Anti- 
 Trust Law before it was supplemented by the Clayton Act. In 
 cases brought by individual employers seeking injunction, con- 
 tempts of the order of injunction are to be tried by a jury 
 where that which is restrained is a crime ; but where it is not 
 a criminal offense, the procedure as to contempts remains the 
 same as before. Where the action is brought by the Govern- 
 ment to restrain violation of the Anti-Trust Act, the procedure 
 in contempts is in all cases exactly as it always was. The 
 practice which was followed in the Debs case, i. e., a hearing 
 without a jury, would, if the Debs case were to re-occur, be 
 followed today. 
 
 This limited effect of the Clayton Act is satisfactory to 
 those who are in favor of complete remedies for any wrong 
 whether committed by labor unions or by employers. The 
 effect may, however, not be seen clearly until the courts have 
 had occasion to construe the Act. The evil of the excessive 
 
 lo 
 
claims as to the effect of the Act which its political promoters 
 have made, will 'be found in the attacks made upon the courts 
 for their proper construction of the language used. The claim- 
 ants of political favor of labor unionists based on the passage 
 of the Act will be loudest in such attacks. 
 
 Union Labor Leaders Intoxicated with Power 
 
 The power that the leaders of the American Federation of 
 Labor exercise has become excessive and detrimental to the public 
 weal and the good of society, and especially of that of the m.em- 
 bers of the labor unions. I fully approve the principle of labor 
 unions. I believe that they are essential in creating a state of 
 equality of dealing between employees and employers. I believe 
 that they have made possible the enactment of a great deal of 
 most healthful and useful legislation and have greatly aided the 
 just cause of wage earners in this regard. But the power their 
 leaders have acquired by the principle of combination in their 
 organization has intoxicated them, and they have exercised a 
 tyranny over society and over their own members that is certainly 
 leading to a reaction and to a restraint of their great powers 
 within proper and lawful limits. They have failed to condemn in 
 any way as they ought, the use of criminal methods to which in 
 a lawless spirit, their representatives at various times have seen 
 fit to resort. They have raised large funds in the defense of 
 men who have proven to be by their own confessions, violators 
 of the criminal law, and they have manifested a desire to secure 
 in express statutory declarations, an immunity for labor unions 
 from the operation of general laws that should be uniform. In 
 other words, they have sought to make themselves and their agents 
 a privileged class, not subject to the laws that affect every other 
 man, and even themselves when not engaged in labor 
 disputes. We must, of course, concede that many of the 
 leaders would be glad to utter protests and interfere with these 
 illegal methods that have been pursued, but there are politics 
 within labor unions and labor union conventions, and the loudest 
 and most violent extremists are too often elements to be reckoned 
 with in maintaining the leadership of such unions. The quiet, 
 sensible, conservative members of the union, of whom there are 
 many more than we realize, do not exercise the influence to 
 which their numbers would often entitle them. Such members 
 manifest their opinions in elections where in the secrecy of the 
 election booth they vote their real opinions and often refuse 
 to obey the formal declarations of political policy made under the 
 influence of the conspicuous labor leaders. 
 
 The case of Loewe vs. Lawler in the sequel to the judg- 
 ment has much significance. One hundred and eighty-six de- 
 fendants with their houses and earnings, subject to the satisfac- 
 tion of a judgment for more than $250,000, are now appealing 
 
 II 
 
to the United Hatters’ Union and to the American Federation 
 of Labor, who spurred them on to their lawless methods, to aid 
 them in the payment of the result of this law suit which was 
 vigorously defended at the instance of the leaders of these or- 
 ganizations, in the avowed interest of organized labor. Neither 
 the Hatters’ Union nor the American Federation of Labor is 
 willing to raise a fund to relieve these i86 victims of their mis- 
 guided urging although they could and did raise funds quite as 
 large for the defense of criminals who subsequently confessed 
 their crimes committed in the supposed upholding of the 
 interests of labor. Such a condition can not but have 
 a useful influence in bringing to the attention of the rank and 
 file of organized labor, the necessity for restraining their 
 leaders in such unwise defiance of the law, and in confining 
 themselves to wise, moderate and lawful methods of maintain- 
 ing their cause against the opposing interests of capital and em- 
 ployers. 
 
 What is needed to produce a sobering effect upon the trucu- 
 lent labor leaders, intoxicated with their sense of political power, 
 is political courage on the part of those who seek to represent the 
 
 people in legis’'^’ ^cc .^ — „ r„ii ^„a 
 
 cussion of sue' >n- 
 
 gress and the ™ )n, 
 
 when in such i>ate IXue ue